Pending Home Sales Surge to Five Year High

Buyers are coming back to the housing market in ever greater numbers, as an industry index measuring contracts to purchase existing homes surged 5.2 percent in October from September.

The monthly gauge of pending home sales from the National Association of Realtors was also revised higher in September and is now up 13.2 percent from October of 2011. This is a forward looking indicator for closed sales one to two months from now.

"We've had very good housing affordability conditions for quite some time, but we're seeing more impact now from steady job creation and rising consumer confidence about home buying now that home prices have clearly turned positive," wrote Lawrence Yun, chief economist for the NAR in a release. (Read More: Could Housing Be the Antidote to the 'Fiscal Cliff'?)

Pending home sales are now at the highest level since March of 2007 and have risen, on a year-over-year basis, for 18 consecutive months. The activity, however, varies from region to region, and the Realtors say the Northeast, which saw a 0.1 percent drop in sales month-to-month- did see some impact from Hurricane Sandy.

Signed contracts also declined in the West, 1.1 percent in October month-to-month and are up just 0.9 percent from a year ago. The West is suffering from a lack of supply, as investors have been scouring the landscape for a decreasing inventory of distressed properties. (Read More: Yes, Housing Starts Surge, but Rentals Are the Drivers)

Pending home sales surged in the Midwest, up 15.6 percent month-to-month and up 20 percent from a year ago. They were also higher in the south by 5.5 percent sequentially and by 17.4 percent from a year ago.

Realtors continue to warn that while this housing recovery seems to be gaining steam, changes to the mortgage interest deduction, as well as other potential hits to the economy from the so-called "fiscal cliff," could derail the momentum. (Read More: Housing Still Precarious in Obama's Second Term)